Austrian energy and petrochemicals company OMV reported sizeable jumps in both revenues and net income for the first half of the year, despite the exclusion of Russian gas and condensate volumes from the group’s total production during the period and resulting higher production costs per barrel.

Distancing itself from Russian upstream assets held in partnership with Gazprom, and the temporary suspension of production in Libya resulted in the group’s total output falling by 145,000 barrels of oil equivalent per day to 345,000 boepd between January and June.

OMV chief executive Alfred Stern however said that the company’s guidance of average production for the whole of the year remains at 390,000 boepd due to the expected restart of production at assets in Libya.

Production in New Zealand and Malaysia resumed after the planned turnarounds, while in Norway the technical issues at the Edvard Grieg field have been resolved, Stern said in the company’s results presentation.

OMV said its earnings for the first half of the year more than doubled to about €32.2 billion ($32.8 billion) against the same period of 2021. Net income attributable to shareholders, rose by the same margin to €2.5 billion.

OMV had been able to cut most of its expenses and costs in the second quarter, according to its data supplement. This resulted in net income of the second quarter coming at almost €2 billion against €500 million in the first quarter, while revenues remained on the comparable level.

The company has also reassured that it significantly reduced its exposure to risks related to importing Russian gas later this year.

There is strong anticipation in Europe that Russia may further reduce pipeline gas deliveries to the continent later this year after Russian gas giant Gazprom halved the volume being sent via the Nord Stream 1 pipeline to about 33 million cubic meter per day from the early morning of 27 July.

Alternative supply

According to Stern, OMV has signed spot gas contracts with alternative suppliers for the delivery of gas at hubs in Germany and Austria.

“The pricing is hub-based, one month ahead. There is no oil link, nor a fixed price. We sell the [imported] volumes month-ahead and we hedge a portion of our sales in order to adjust to a potential reduction in supply. This means our financial risk is limited to a maximum of 30 days”, Stern said.

To enable these contracts, OMV has secured 40 terawatt hours (3.8 billion cubic metres) of European transport capacities via pipelines from Germany and Italy to Austria earlier in July.

These capacities enable the transport of the gas OMV produces in Norway as well as purchased liquefied natural gas quantities to Austria, according to Stern.

For OMV and for Austria, he said, “this is an important step towards more independence [from Russian gas] because OMV would be able to cover all of its customer delivery obligations in Austria, which correspond to almost half of the country’s total annual demand”.

Attention to storage

Also, work has been done to fill up the OMV-operated storage facilities with gas. Storage is at more than 80%, which is equivalent to around 20 terawatt hours (Twh), according to Stern.

Earlier this week, Austria’s Ministry of Climate Action & Energy said that it assigned a Gazprom’s unused share of the country’s key underground storage facility in Haidach to another operator under a “use it or lose it” condition, with filling to start in the beginning of August.

State-owned RAG Austria, already a co-operator of Haidach, has been chosen to take over Gazprom's portion of the facility that Gazprom refused to fill, arguing that the gas giant no longer controls its European gas trading and distribution subsidiaries.

The assigned portion amounts to about 14 Twh of the Haidach working gas volume.

According to the ministry, concurrently with unblocking access to the Haidach facility, it has secured contracts with a number of suppliers to deliver about 12.3 Twh of gas into the so called “strategic hold” of 20 Twh from where gas will become available for withdrawal by consumers only on 1 November.